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The Fine Print Matters – The Site Usage Agreement

I am still surprised how many otherwise sophisticated businesses still do not require me to agree to terms and conditions before I complete an online transaction.  In April of 2006, I wrote an article about forum selection clauses in your website terms of use agreements.  I would link to the article, but the publication is a little restrictive when it comes to that.  The main point was that most courts will enforce your terms if they are contained in a click-wrap agreement rather than a browse-wrap agreement.

A click-wrap agreement is that little annoying box you have to check confirming you read and understood the terms and conditions (did you even look at them, really?) before you can complete the transaction.  A hyper-wrap agreement is one where the terms are referenced more than once in a conspicuous spot on the website before the deal is completed online.  A browse-wrap agreement is when you stick all of your terms and conditions on a link at the bottom of the page, but I never have to review them before consummating a deal online.  Your better off with the first and less secure as  you move down the list.   

While a lot has changed in three years in my area of practice, this basic rule hasn’t.  EBay was successful in enforcing its forum selection clause requiring the disgruntled plaintiff to move his lawsuit from Pennsylvania to EBay’s home in California.  Evan Brown writes about the case here on his Internet Cases blog

A federal district court in Illinois enforced a limitation of liability clause in a hyper-wrap agreement that prevented the plaintiff from seeking any damages beyond the amount actually paid for the goods.  You can access the case through the Hawley Troxell website here.  In this case, the terms were hyperlinked on three separate pages before the order could be processed.   The final order step read:  “STEP 4 of 4:  Review terms, add any comments, and submit order,” which was followed with the hyperlink to the terms.  Although not as good as a click-wrap agreement, this court upheld the terms in the hyper-wrap agreement.

I know you are not running E-Bay and probably don’t think about being sued very often.  If you are online, you are selling all over the country and the possibly the world – and this is exactly the type of things lawyers think about.  If you are going to bother even having favorable terms and conditions like forum selection clauses and limitations of liability, make sure they are enforceable.

While we are on the topic of terms of use agreements, I have been meaning to blog about the post from Professor Eric Goldman on his Technology and Marketing Law Blog, but I think the title says it all:  ”Stop Saying ‘We Can Amend This Agreement Whenever We Want’!–Harris v. Blockbuster.”